New Steps May Increase Transparency of Federal Contracts and Grants

open filing cabinet drawer

A new policy could provide the public with better information about federal contracts and grants. On June 12, the Office of Federal Financial Management, a division of the Office of Management and Budget (OMB), issued a memo directing agencies to improve the quality of data posted for public access on

The memo directs agencies to use consistent ID numbers for grants and contracts to help track all information related to a particular contract or grant. In addition, agencies must validate information reported to USAspending, such as by reporting information directly from agency financial systems. If successful, these reforms could make federal spending information more accurate and useful.

Contracts and grants make up roughly $1 out of every $3 in federal spending. It is important that such spending be efficient and effective. Despite some advances in recent years, much information relating to federal grants and contracts remains murky. Increased transparency would enable greater public oversight and deter or detect unnecessary or inappropriate spending.

Efforts to Improve Spending Data Quality

Since was launched in 2007 to provide accessible information about federal spending, there have been concerns about the quality of information posted there. For instance, a 2010 report by the Government Accountability Office (GAO) found "numerous inconsistencies between data and records provided by awarding agencies."

The administration has taken several steps aimed at ensuring spending data quality. The topic was addressed in the December 2009 Open Government Directive and in OMB memos from February and April 2010.

It is positive that the administration recognizes the need to improve spending data quality. But the fact that the administration has issued yet another policy on the topic shows that agency reporting continues to be a problem.

Award IDs

The memo requires agencies, starting in October, to assign a unique identification number, called a Federal Award Identification Number, to each grant or contract. The number must be used in all documents related to that contract or grant, and the recipient must provide the number to any sub-recipients. Using the same unique number consistently will allow members of the public to more easily identify information pertaining to a particular grant or contract.

Data Validation

Agencies also must, by October at the latest, put in place procedures to check data reported to against data in agency financial systems or public sources. Agencies will also have to report the level of accuracy detected in those checks and certify that they have implemented processes to control data quality.

The memo acknowledges that quality issues arise "because existing reporting models are not directly tied to agency financial systems." In other words, the information displayed on does not necessarily come directly from agencies' own internal accounting systems, but mostly comes from other data sources that have data quality issues themselves.

Under the new directive, agencies may meet their requirement to validate data by reporting such data directly from their financial systems. Although that approach is optional, the memo also notes that the validation requirements "will inform ongoing policy discussions to develop a future vision for Federal spending transparency" and that "further guidance to implement a more comprehensive vision will eventually supersede this section of this Memorandum." Therefore, it appears that OMB intends to continue to refine the requirements for how agencies report and validate data to

OMB's new data policy, released in May, could shed light on the future approach to reporting. The new policy directs agencies to create information in ways that support "downstream interoperability between information systems and dissemination of information to the public" and that "facilitate extraction of data in multiple formats and for a range of uses." In this context, the data policy would suggest that agency financial systems would be designed in the future to automatically report relevant disclosable information to sources like

Landscape for Contracting Transparency

Other recent efforts have also called attention to grant and contract transparency:

  • On June 18, the G8 countries – including the Obama administration on behalf of the U.S. government – issued the Lough Erne Declaration, which states that "Governments should publish information on … government contracts in a way that is easy to read and re-use, so that citizens can hold them to account."

  • On June 20, the international Open Contracting Partnership issued the Open Contracting Global Principles, which describe how information about government contracting should be publicly disclosed, including stating that governments should affirmatively disclose contract documents. Currently, such documents are not routinely disclosed by most federal agencies.

  • On May 21, the Digital Accountability and Transparency Act was introduced in Congress, as H.R. 2061 in the House and S. 994 in the Senate. The bill would require several reforms to spending transparency, including mandating unique identifiers for awards – as the new OMB memo does – as well as establishing data standards and requiring additional information to be disclosed, among other changes. The House Committee on Oversight and Government Reform approved the bill on May 22. The Senate Committee on Homeland Security and Governmental Affairs has not yet taken up the legislation.
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